Paul Cluley
As a partner in Allen & Overy's derivatives practices in Tokyo, Hong Kong and London for 20 years, Paul has worked on all aspects of derivatives and structured finance. He is particularly known for his work in contentious derivatives and terminations and is the author of the leading textbook in this area, "Close-outs: The law and market practice of OTC derivative terminations" (2024). He is also highly experienced in large corporate equity financings and derivatives, M&A of derivatives businesses, regulatory margin, repos, securities lending and repackagings.
Practice Area
Panel
- Contributing Author
Experience
- Allen & Overy LLP (1998 - 2023)
- Cameron McKenna (1993 - 1998)
Membership
- Expert at P.R.I.M.E. Finance
- Affiliate at Rutter Associates LLC
Qualification
- LLB (Euro) (1992)
Education
- University of Exeter (1992)
- Université d'Aix-Marseille (1991)
16 Contributions by Paul Cluley
PRECEDENTS
Form Notice Designating an Early Termination Date Following a Tax Event or Tax Event Upon Merger under the 2002 ISDA Master Agreement
Notice designating an Early Termination Date following a Tax Event/Tax Event Upon Merger [ Insert Lead-in Language ] [ Tax Event Termination Event OR Tax Event Upon Merger Termination Event ]
We refer to our notice dated [ insert date ] (the 'Original Notice'), which advised you of the occurrence of [ a Tax Event Termination Event in respect of which we are the sole Affected Party OR a Tax Event Upon Merger Termination Event in respect of which we are both the Burdened Party and the Affected Party OR a Tax Event Termination Event in respect of which both we and you are Affected Parties ] for the purposes of the Agreement...
Banking & Finance
PRECEDENTS
Form Notice under Section 6(b): Tax Event or Tax Event Upon Merger (1992/2002 ISDA Master Agreement) – Affected Transactions, Transfers and Parties’ Obligations (Sections 5(b)(ii)/(iii))
Notice of a Tax Event/Tax Event Upon Merger
[ Insert introductory wording ] We hereby give you formal notice of the following matters: [ Provide a reasonably detailed account of the facts leading to the Tax Event/Tax Event Upon Merger and clearly identify the Affected Transactions. Your narrative should be sufficiently specific and in alignment with the wording of section 5(b)(ii) or (iii), enabling the counterparty to reasonably comprehend the basis for, and rationale behind, your determination as applicable.]...
Banking & Finance
PRECEDENTS
Form of Notice Designating an Early Termination Date following an Illegality Termination Event under the 2002 ISDA Master Agreement
Notice designating an Early Termination Date following an Illegality Termination Event
[ Insert Lead-in Language ] We refer to our notice of [ insert date ] (the 'Original Notice'), which advised you of the occurrence of an Illegality Termination Event.
Waiting Period
[ [ No Waiting Period is applicable in relation to the Illegality Termination Event, as it arose under Section 5(b)(i)(2), but concerns a payment, delivery or compliance obligation that was due on the date of the Original Notice...
Banking & Finance
PRECEDENTS
Form of Notice Designating Early Termination Date after Credit or Tax Event Upon Merger or Additional Termination Event (Burdened Party not Affected) under the 2002 ISDA Master Agreement
Notice designating an Early Termination Date following a Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where Burdened Party is not Affected Party [ Insert Lead-in Language ]
We hereby give notice that the following matters have occurred: [ Set out, with an appropriate level of specificity, the facts and circumstances that result in the Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger in which the Burdened Party is not the Affected Party, and identify the Affected Transactions. Your explanation should be detailed enough and expressly linked to the relevant wording of Section 5(b) or the Additional Termination Event provision so that the counterparty can reasonably understand the basis for your determination. ]...
Banking & Finance
PRECEDENTS
Form of notice designating Early Termination Date following Event of Default under the 2002 ISDA Master Agreement, with Automatic Early Termination language and example default descriptions
Notice designating an Early Termination Date following an Event of Default
[ Insert Lead-In Language ]
An Event of Default under the Agreement has arisen with respect to you under one or more of the following provisions:
Section 5(a)(i) (Failure to Pay or Deliver)
Section 5(a)(ii) (Breach of Agreement; Repudiation of Agreement)
Section 5(a)(iii) (Credit Support Default)
Section 5(a)(iv) (Misrepresentation)
Section 5(a)(v) (Default under Specified Transaction)
Section 5(a)(vi) (Cross Default)
Section 5(a)(vii) (Bankruptcy)
Section 5(a)(viii) (Merger Without Assumption)
The particulars of the Event of Default appear below: [ Insert description of the relevant Event of Default, see Exhibits to this template notice for examples of descriptions of different Events of Default under the Agreement ]
If Bankruptcy has occurred and Automatic Early Termination applies: Automatic Early Termination is specified as applicable to you in the Schedule to the Agreement, and the circumstances outlined above amount to an Event of Default under Section 5(a)(vii) [ (1)/(3)/(4)/(5)/(6) ] [ or, insofar as analogous, [ 8 ] ]. Consequently, the Early Termination Date fell on [ insert date ]...
Banking & Finance
PRECEDENTS
Form of Notice of Failure to Pay or Deliver under the 1992/2002 ISDA Master Agreement: Potential Event of Default, 2(a)(iii) suspension; Early Termination rights reserved
Notice of Failure to Pay
[ Insert Lead-in Language ] Pursuant to Section 2(a)(i) of the Agreement, you were obliged to provide, on [ insert settlement date ] [ a payment in the amount of [ insert currency and amount ] OR the [ delivery of [ insert description of assets to be delivered ] ] ] ...
Banking & Finance
PRECEDENTS
Form of Section 6(b)(i) Notice: Illegality Termination Event under Section 5(b)(i), 2002 ISDA Master Agreement (Affected Transactions, Credit Support and Waiting Period)
Notice of an Illegality [ Insert Lead-in Language ]
We hereby notify you that the following situation has arisen: [ Set out, with appropriate specificity, the facts and circumstances giving rise to the Illegality. Your account should be sufficiently detailed and linked to the wording of Section 5(b)(i) so that the counterparty could reasonably be expected to understand the basis for your determination. ]...
Banking & Finance
PRECEDENTS
Notice designating an Early Termination Date after Credit Event Upon Merger, Additional Termination Event or Tax Event Upon Merger (Burdened Party not Affected Party) under 1992 ISDA Master Agreement
Notice designating an Early Termination Date following a Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where Burdened Party is not Affected Party
[ Insert Lead-in Language ]
We hereby give notice of the following circumstances:
[ Provide, to a reasonable level of detail, the facts and context that result in the Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where the Burdened Party is not the Affected Party, and specify the Affected Transactions. Your explanation should be sufficiently thorough and expressly connected to the relevant wording of Section 5(b) or the Additional Termination Event provisions so that the counterparty can reasonably be expected to understand the basis for your determination ]...
Banking & Finance
PRECEDENTS
Precedent closing wording for ISDA Master Agreement Early Termination notices: reservations of rights, non-waiver, translation and governing law clauses
Closing language
Should you have any questions about this notice, kindly contact [ insert name and role with contact details ]...
Banking & Finance
PRECEDENTS
Precedent Force Majeure Event Notice under the 2002 ISDA Master Agreement (Sections 5(b)(ii), 5(d) and 6(b))
Notice of a Force Majeure Event
[ Insert lead-in wording ] We hereby give notice to you that the following matters have arisen and are in effect: [ Set out, with a suitable degree of specificity, the facts giving rise to the Force Majeure Event, including the particular force majeure occurrence or act of state. Your narrative should be sufficiently detailed and aligned with the wording of Section 5(b)(ii) so that the counterparty can reasonably understand the basis for your determination. ] This serves as notice pursuant to Section 6(b)(i) of the Agreement. For the avoidance of doubt, this notice does not fix or nominate an Early Termination Date under the Agreement...
Banking & Finance
PRECEDENTS
Precedent notice designating an Early Termination Date after an Event of Default under the 1992 ISDA Master Agreement, with example descriptions for Section 5(a) defaults and Automatic Early Termination
Notice designating an Early Termination Date following an Event of Default [ Insert Lead-In Language ]
An Event of Default under the Agreement has arisen with respect to you in relation to:
Section 5(a)(i) (Failure to Pay or Deliver)
Section 5(a)(ii) (Breach of Agreement)
Section 5(a)(iii) (Credit Support Default)
Section 5(a)(iv) (Misrepresentation)
Section 5(a)(v) (Default under Specified Transaction)
Section 5(a)(vi) (Cross Default)
Section 5(a)(vii) (Bankruptcy)
Section 5(a)(viii) (Merger Without Assumption)
The particulars of the Event of Default are set out below: [ Insert description of the relevant Event of Default, see Exhibits to this template notice for examples of descriptions of different Events of Default under the Agreement ]
Where Bankruptcy has occurred and Automatic Early Termination applies: Automatic Early Termination has been specified as applicable to you in the Schedule to the Agreement, and the circumstances described above constitute an Event of Default under Section 5(a)(vii) [ (1)/(3)/(4)/(5)/(6) ] [ or, to the extent analogous thereto, (8) ]. Accordingly, the Early Termination Date fell on [ insert date ]. We shall determine the amounts due in connection with that Early Termination Date in respect of the Terminated Transactions...
Banking & Finance
PRECEDENTS
Precedent Notice Designating an Early Termination Date following a Force Majeure Termination Event under the 2002 ISDA Master Agreement (All or Selected Affected Transactions)
Notice designating an Early Termination Date following a Force Majeure Event
[ Insert Lead-in Language ] We hereby refer back to our notice dated [ insert date ] (the 'Original Notice'), formally advising you that a Force Majeure Event has occurred and that it constitutes a Termination Event for the purposes of the Agreement.
Waiting Period
[ No Waiting Period is expressly applicable to the Force Majeure Event, as it arose under Section 5(b)(ii)(2), specifically in relation to a payment, delivery or compliance obligation that was due on the date of the Original Notice.
A Waiting Period did apply to the Force Majeure Event and ended [ on [ insert date ] OR on or before the date of this notice ] ...
Banking & Finance
PRECEDENTS
Precedent Notice Designating Early Termination Date following a Tax Event or Tax Event Upon Merger (1992 ISDA Master Agreement—Multicurrency Cross-Border)
Notice designating an Early Termination Date following a Tax Event/Tax Event Upon Merger [ Insert Lead-in Language ] [ Tax Event Termination Event OR Tax Event Upon Merger Termination Event ]
We refer to our notice of [ insert date ] (the 'Original Notice'), by which we advised you of the occurrence of [ a Tax Event Termination Event in relation to which we are the sole Affected Party OR a Tax Event Upon Merger Termination Event in relation to which we are both the Burdened Party and the Affected Party OR a Tax Event Termination Event in relation to which we and you are both Affected Parties ] for the purposes of the Agreement...
Banking & Finance
PRECEDENTS
Precedent: Notice designating Early Termination Date following an Illegality Termination Event under the 1992 ISDA Master Agreement (Multicurrency—Cross-Border)
[ Insert Lead-in Language ]
Illegality Termination Event
We hereby refer to our notice dated [ insert date ] (the ' Original Notice ') formally notifying you of the occurrence of an Illegality Termination Event. If Party A is the sole Affected Party and Section 5(b)(i)(1) applies: In accordance with Section 6(b)(ii) of the Agreement, we have employed all reasonable endeavours (not requiring us to bear any loss, save for immaterial, incidental expenses) to, within 20 days from the date on which the Original Notice became effective, diligently transfer all of our rights and obligations under the Agreement in respect of the Affected Transactions to another of our Offices or Affiliates so that the Illegality Termination Event no longer subsists...
Banking & Finance
PRECEDENTS
Pro forma heading and lead-in wording for ISDA Master Agreement Early Termination Notices, including addressing, delivery and copy instructions (1992 and 2002)
Heading and lead-in language
[ Letterhead of Party A ]
To: [ Insert Party B Legal Name ] Address: [ as per ISDA Schedule ] FAO: [ Insert if in the ISDA Schedule ] Date: [ Insert date of notice ] Delivery: [ [ By Hand ]/[ By Courier ]/[ By registered post ]/[ Other ] ]; Also: [ By email to [ insert address ]/By fax to [ insert fax number ] ]
Copy to: [ Insert if ISDA Schedule requires a copy, or if helpful (eg an insolvency officer, investment manager, trustee of Party B) ]; Address/FAO/Delivery/Also: [ as per ISDA Schedule ]
[ Insert title of notice ]
Re: [ 1992 ISDA Master Agreement (Multicurrency—Cross Border) OR ISDA 2002 Master Agreement ] dated [ Insert Date ] [ with the [ Credit Support Annex ]/[ Credit Support Deed ]/[ Other ] dated [ insert date ], each case ], as amended, varied and/or supplemented, including schedules, annexes, exhibits and Confirmations (the 'Agreement'), and outstanding Transactions, each made between [ Party A name ] ('Party A', 'we' or 'us') and [ Party B name ] ('Party B' or 'you')...
Banking & Finance
PRECEDENTS
Template notice of Illegality Termination Event under the 1992 ISDA Master Agreement (Multicurrency—Cross-Border): Affected Transactions, Credit Support and Section 6 transfer and mitigation process
Notice of an Illegality [ Insert Lead-in Language ]
We formally advise you that the events set out below have occurred: [ Provide, with appropriate specificity, the facts and conditions that result in the Illegality. Your description must be detailed enough and aligned with the language of Section 5(b)(i) so that the other party can fairly and clearly understand the basis for your conclusion...
Banking & Finance
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